Abstract
Carrefour can be regarded as one of the largest French multinational company. This multinational retailing company was started in 1958. It has more than 1,452 chains of hypermarkets across the world. Carrefour has the world second largest revenue base. It is also rated as the world third profit making organisation. Carrefour is headquartered at Levallois-Perret in Paris. However, despite the success of Carrefour Company across the world in terms of revenue and profit, it is still faced by various challenges. Some of these challenges include competitiveness and strategy, productivity, forecasting, forecasting, product and service design, strategic capacity planning for products and services, process selection and facility layout, work design and measurement, location planning and analysis, management quality, and how to control quality levels in the market. This paper seeks to identify and discuss operational problems that face Carrefour Company and their possible solutions.
Competitiveness and Strategy
Competition is a major driving force in the world of commerce. The major competitors of Carrefour in the world markets include Wal-Mart and Tesco. Wal-Mart has been able to beat Carrefour in terms of revenue collection across the world. In the same way, both Wal-Mart and Tesco have continually beaten Carrefour in terms of profit margins. It is therefore important that Carrefour chains accept that it has a problem of competitiveness and develop a strategy to curb it.
Every company in the market must strive to outdo its competition in order to remain relevant to the customers and investors. Some of the problems that may have reduced the competitiveness’ of Carrefour Company include its May 2009 saga in France. Carrefour was accused by the French government of violating about 2,500 business regulations. For example, it was claimed that the operations of the business violated weight and standardisation rules. The meat products in the stores had shrunk by less than 15% of its weight which should not happen.
The most incisive theory in the study of competitiveness and strategy is the theory of competitive advantage. This theory is applicable in the situation of Carrefour Company. Theory of competitive advantage was put forward by Michael Porter back in 1985. This theory claims that cheap labour is ubiquitous for any economy. This schools of thought further pose it that organisations can achieve competitive advantage when it develops the ability to outperform the competition in its markets. Carrefour Company can therefore develop strategies to outdo its competition. Brockbank (2006, p.337) observes that it is also the position of this school of thought that an economy will not only grow due to its natural resources.
This theory emphasises that economic growth is achievable when an organisation put emphasis in service and goods which attract prices by premium. According to the competition theory, a company can be able to outdo its competitors if it is able to access enough natural resources like cheap source of power, trained and skilled human resource. Carrefour has been accused of hiring unqualified personnel. Perhaps this is the reason behind the below standards meat saga. The operations manager of the supermarkets in France would have noted that the baby formula was long past its expiry dates if he was a professional. Such employees hinder companies from achieving competitive advantage.
Brockbank (2006, p.337) suggests that use of modern technology especially adoption of modern information communication technology can also give an upper hand to the company. Other companies adopt the use of robot technology to increase their productivity and efficiency. Porter affirms that competition enables a company to develop proper attributes that position it above other companies in the competition. It is out of these undertakings that a company develops competitive advantage neither by developing strategies that are novel and that are not in the process of being implemented by other companies.
Recommendations
In order for Carrefour Company to meet its competition and to strategies to win the market, there are various initiatives that the company must undertake. Bowles and Gintis (2007, p.74) argue that good initiatives will involve hiring qualified and skilled human resource base. The errors that the company has been accused of can be eradicated through skilled personnel. In order for Carrefour Company to compete well with others its human resource must be well equipped with modern technology skills. Bowles and Gintis (2007, p.74) argue that a company should also adopt modern technological methods of carrying out operations. For example, refrigeration temperatures can be easily and efficiently controlled through computer technology. Pricing and labelling can also be carried out through technological methods to avoid errors. There barcode of items in the stores should indicate and remind the operations officers of their expiry dates. Customers and investors will want to buy and to invest in a company that has competitive employees and that adopts modern preservation technology.
Productivity
The productivity level of an organisation is important in determining its success the market. Various theories of productivity have been put forward. According to the normative theory of production, there are various tools of production management that can be adopted in optimisation of productivity levels of a firm. Proper planning of schemes of production can also enhance the productivity of a firm. The normative theory bases its foundation and direction on extensive research. Ellickson, Misra, and Nair (2012, p.750) assert that the producer should carry out extensive research on the existing situation of production levels hence come up with ways of improving it. According to this theory producers of goods and services should not take action without extensive research to inform the undertaking. For example, a company like Carrefour should conduct extensive research on the technology of production that is applying to its economy of production, its quality of production, timing, safety, motivation, and logistics. This makes it adaptable for improvement of Carrefour.
The productivity of Carrefour has faced challenges in some countries such as China and France. For example, since the move to tribalism Carrefour began in China the company has been declining in productivity. This case is an operation challenge that the company needs to take and to provide solutions. The French-owned Carrefour Company was said to plan closing of its Chinese market due to low productivity of the business. In the Chinese market Carrefour Company used to receive benefits from the state and the people for being the first multinational chain to invest in China. However, there has been intensive competition from the developing local chains which seems to outdo Carrefour in productivity. The level of productivity in Carrefour has decreased with an increase in employee turnover and closing of stores in China.
There has also been a rise in logistics and physical stores especially with competition from the local companies. The low productivity of the Carrefour Company in China is therefore not likely to yield high profits like it used to in the past. Payment of rent is likely to be the highest challenge for Carrefour productivity. For instance after expiry of the lease period for its rental in 2015, the company productivity may go down. Carrefour suffered a net loss of U.S $359.41 million in 2011. According to Ellickson, Misra, and Nair (2012, p.750), the management has to embark on cost control, management change, restructuring, and procurement changes in a bid to change the productivity of the company.
Recommendations
Borrowing from the productivity theory, there are various undertakings that Carrefour has to undertake in order to optimise its production levels in the markets. Normative theory recommends that an extensive research on the current production be carried out before making any alteration to the current situation. Decline in productivity of Carrefour in its local and foreign market can be ironed through proper research in the following areas. According to Bilston and Sohal (1995, p.4), the company should extensively research on the productivity of its technology, whether the current economy of production is feasible, quality of its products in the market, whether the productivity is timely, whether productivity result in profits, and whether the current production method is safe and inspirational to investors and customers. These changes should be able to inform alter low productivity by reducing the current levels of turnover, and enhance the quality and standard control. Proper investment decisions will also be stemmed. For example, the company can consider investing in real estate instead of renting business houses in China.
Forecasting
The world of business today has become very fluid and dynamic. Changes in technology especially the adoption of modern information communication technology have triggered the need for forecasting. Carrefour Company should forecast on the future of its business and hence plan for it. For example, the company should forecast on what step it should undertake to save its business in china from collapsing after the end of the house lease period in 2015. Housing has become very expensive in major cities of China. It will therefore be impossible to rent houses and make a profit. The future of the company is also likely to be faced with the challenge of high competition from upcoming competitors especially in the foreign markets. DeRoeck (1991, p.1) suggests that forecasting will also enable Carrefour to avoid court fines and punishment like those that faced it for selling expired products and below standard products in France.
The most adaptable theory of forecasting in the case of Carrefour is the planned behaviour theory. This theory bases its position on reasoned action and was put forward by Fishbein in 1985. According to Begelfer (2012, p.29), it is possible to predict deliberate behaviour though factors like attitude that people have towards certain behaviour, subjective norms especially about their image in the mind of their peers, and how they perceive the subject of personal behaviour control. This theory further pose it that any behaviour has a driving force in intentions. DeRoeck (1991, p.1) argues that attitude of a person towards a certain behaviour is predictable. Interviews should be conducted by the forecasting company. However, the interviews have to be very particular and to the point to avoid generalisation. A specific question can elicit attitude and predict action. In order for Carrefour to forecast its future proper and specific interviews should be conducted.
Recommendations
Carrefour Company should adopt the Planned Behaviour theory of forecasting. The company should carryout research on its future using specific interview questions. The respondents should include its customers and other publics. The research should endeavour to predict the customers’ attitude towards certain behaviour. For example what will the customers do if the company decided to use electronic payment services in all its stores? Such questions will enable the company to predict reaction through attitude. DeRoeck (1991, p.2) asserts that forecasting will also enable Carrefour to know the beliefs of the customers hence predict their subjective norms.
For example, believe of the customers that the refrigerated products in Carrefour France are unhealthy can be eliminated through research. The company can therefore enhance public relations programs to counter the negative publicity. If one customer will avoid the supermarket for an error in standardisation of meat weight, it is possible to predict that even their friends will behave the same way. If a group of customers from Middle East do not like pork products then their beliefs are likely to be the same with the majority of customers in the region. The company can therefore reduce stocking of such products in the regional stores. Planned behaviour theory can also enable the company to control perceived behaviour.
Product and service design
The design of a product or service is important in determining its marketability. According to Chen and Wang (2008, p.4259), the theory of product design denotes the outcome all the processes involved in coming up with a product or service and how they fit well in establishing it. Product design indicates how various components of a product come together to form a complete whole. Customers are satisfied by the design of products and services. According to Cagliano et al. (1998, p.865), it is the product and service design that determine the processes in a company. For example, it determines the steps to be involved, the human resource, the technology, and the finances to be deployed. Cagliano et al. (1998, p.865) further affirm that product design is determined by its flexibility, its line of production, and its cost.
Schreier, Fuchs, and Dahl (2012, p.18) affirm that Carrefour products and service designs are likely to influence its market. There has been complaining and sabotage of the Carrefour products at France after a young boy was killed by a falling wall in one of the Carrefour supermarkets in France. It is therefore important that theory of product design be adopted by this company. According to Chen and Wang (2008, p.4259), business products are tailored to meet certain specified style through the application of new technology. Although Carrefour is not an industrial company it does packaging of some of its consumer products. In the packaging of these products the company can design products that give its company a competitive edge.
Chen and Wang (2008, p.4260) further affirm that product designs enable a firm to create new markets. Customers and investors are looking for what is new in the market. Kumar, Chen, and Simpson (2009, p.71) confirm that new products are quick to attract the eye of the customer. Carrefour Company should use product design to create new markets for their products. New products will enable the company to change its image especially in new markets. Begelfer (2012, p.29) affirms that products and brands that have been in the market for a long period of time can also be redesigned to take a new image. Schreier, Fuchs, and Dahl (2012, p.18) argue that patterns of placement of shelves and organisation of various products in the Carrefour stores can also be redesigned. Patterns that create certain mental illusions in the mind of the customer should be encouraged.
Recommendations
Informed by theory of product design, this research would recommend that Carrefour design its services and products in order to better its image. The design of shelves Carrefour stores should be arranged in an array of patterns that impress the customers. According to Cagliano et al. (1998, p.865), Carrefour Company should also package its products in a particular design that impress and creates a particular image in the mind of the investor and customer. It is also recommended that Carrefour Company use product and service design to enhance product flexibility, its line of production, and reduce its cost of production. Dempsey (2004, p.32) argue that products that have been in the markets for a long period of time and have become slow movers should also be redesigned and re-branded to achieve more sales. It is also important that as Carrefour turn to real estate investments in China, its stores should be constructed in a particular design; that represent its corporate identity.
Strategic Capacity planning for products and services
The best theory in strategic capacity planning for products and services is the decision theory. According to the decision theory all the financial and capacity decisions should be strategically positioned as the first decisions. The decision theory also pose it that for the success of an organisation the financial and capacity decisions should be followed by decisions about the location of the institution or facility. According to Hale, Huq, and Hipkin (2012, p.4271), facility location should be followed by decisions on the product or service design. After decisions on products and services have been made the company should continue to make decisions about the layout of the facility and then the work systems should be the last.
Schreier, Fuchs, and Dahl (2012, p.18) affirm that the capacity of an organisation is the higher limit of its operating system especially of its output. The theory of decisions also poses it that whenever products look alike their capacity can only be measured through units that are similar. In case the company products are not alike they can be made in the resources applied. These materials can be the time, land, and labour. The decision theory recommends that capacity should not be measured in terms of monetary units. This is attributed to the fact that products experience price alterations during their life cycles. The decision theory attributes decisions on capacity on design capacity and product-mix plans.
Bilston and Sohal (1995, p.4) argue that the quality of design will depend on quality specifications, and work rules. The decision theory emphasise that capacity can be reduced by delays of supply and distribution, and demand change. Planning will mainly make decisions on long term and short term goal. These Carrefour companies have been continually rate among the best profit makers and revenue base companies it the world. The decision theory should therefore inform the company on prioritising matters of finance followed by location of its supermarkets. For example, Carrefour Company tried to venture into the Australian market in 1976, but it failed.
Due to lack of proper planning on how to venture into this market, it has become impossible to carry out financial and location decision for the stores. According to the decision theory the capacity decision for Carrefour Company should emphasise capacity design for example, the company has started Eco-Planet in Belgium which aims at selling green energy and selling gas. The decision theory that points at a poor time management and delays in the supply and distribution for decreased capacity can be applied in Carrefour. For example, elimination of 1, 672 jobs that were eliminated by Carrefour in Australia would have been averted.
Recommendations
This research recommends that Carrefour Company adopt the decision theory of capacity building in its operations. The company should prioritise financial decisions when making new investment decision. This is because if the company had well planned financial program on how it will venture the Australian market it would not have closed business. The fact that the company eliminated more that 1,672 jobs in the Australia after closure of business indicates poor financial and human resource management decisions. According to the decision theory of capacity financial decisions should be followed by location decision. The position of a store matters in competition and success.
The company should make informed decisions to locate their stores near their potential consumers and in areas with ample security and parking. Carrefour should also design their products in a unique way so that they are able to stand out amidst many similar products. According to Hale, Huq, and Hipkin (2012, p.4271), proper redesigning will enable the products not to be compared with similar products from other companies hence win over the market and the competition. With proper capacity decision the company will be able to produce at its peak. Increased productivity of the company will increase its ability to venture into more countries. For example, since the company has been able to make its products accessible online in Belgium it can make enhance the same product decision in other countries.
Process Selection and Facility layout
The most adaptable theory in process selection and facility layout is the theory of the process by Ben Bendenoch. The process theory is both predictive and correlative in it approach. According to Hale, Huq, and Hipkin (2012, p.4271), the process theory concerns the management, the employees and the location. The process theory of organisation management divides organisational characteristics into several layout stages. The first stage of the process theory is the preparation stage. At this stage several people make the decision to open the business, acquire capital, and search for location and defining the product or service that the company will offer. The second stage involves the opening of the operations.
The employees are directly instructed by the owner. At this stage security of the employees is not guaranteed since the business may close, employees may lose their jobs, be fired in case of closure. This is exactly what happened to Carrefour investment at Argentina where they closed business and laid off employees before it had taken root in the country. The third stage of the process theory is the success level. At this level the organisation has to embark on planning. According to Hale, Huq, and Hipkin (2012, p.4271), the process theory proposes that development of hierarchy should take root as the owner distance himself from the management. This theory is adaptable in Carrefour Company especially in foreign countries where it opens new stores.
External supermarkets should ape the success of the major stores in other nations. The fourth stage is the learning stage. The employees begin learning about management secrets. Rules are tightened and change is minimal and the company is perceived as successful by customers and investors. Most of the Carrefour supermarkets in France are at this stage. Raman, Nagalingam, and Gurd (2009, p. 5611) assert that a business has to renew its vision and med its image in case it is tattered. The image of Carrefour has to be made especially with the numerous court charges in France. The fifth stage of the process theory is the organisation innovation. At this stage, cooperation of the management and employees is important as people need to appreciate each other. Competition for leadership is also minimal.
Recommendations
Carrefour Company should embark on implementation of the process theory. The implementation of the process should be done in regard to the position of the business. The company can implement the process theory in venturing into the Australian market. Since the company has not tried getting into the Australian market after the first failure, all stages of the process theory and layout should be allowed to take a course. The company should plan the preparation stage after proper research on the market. Raman, Nagalingam, and Gurd (2009, p. 5611) assert that the process theory is predictive and will enable the company predict its success in the new market. The company should also mend the image of its subsidiaries that are in the learning stage.
The vision of various Carrefour stores in different countries should also be redefined. Various stores in France should embark on learning how to improve their image after the increased negative publicity. Carrefour Company should also ensure that their stores are laid out in a way that enhances their identity. Layout should create an image of comfort and security. Various items should be positions according to their relationship. Dempsey (2004, p.32) asserts that a company should have a well laid process of growth and management.
Work Design and Measurement
At Carrefour work design enables success of leadership and supervision. Wright and Timothy (2005, p.409) observe that the success of the company in performance can also be attributed to good work design at Carrefour. According to Erskine (2012, p.12) work design involves the organisation of various facets of a job into a whole job. Since Carrefour Company has thousands of subsidiaries in many countries, job design and measurement is important. The company has a well established structure that requires proper job description for success. At Carrefour jobs are designed in a way that enables employees to concentrate in certain areas of specialisation. For example, supply work is brought together with distribution work, supervisors work together with the human resource managers, customer care officers work together with the public relations and the branding department. At Carrefour Company, work performance is carried out through various methods of appraisal.
The most applicable theory in work design and measurement at Carrefour is the job characteristic model. This theory emphasises on job enrichment. Job characteristic theory focus on five job characteristics: job identity, variety of skills, job significance, job feedback, and job autonomy. According to the job characteristic model, jobs have certain autonomy that makes them have a high degree of intrinsic motivation. Employees need to grow and to develop their skills through job performance. According to Freeney and Fellenz (2013, p.1427), autonomy of jobs makes employees hype their performance and responsibility. Job design motivates employees. Carrefour Company has a variety of jobs that require various skills. Torraco (2005, p.85) affirms that jobs are designed to meet the specific characteristics of a particular market. For example in Brazil Carrefour company has more than 25 million varieties of products. Jobs are therefore brought together to fit the variety of products.
Recommendations
Adoption of the job characteristic model at Carrefour Company will require that the company enhance job identity in all its stores. The company should carryout proper and detailed job identity plan that enables every employee to understand his or her duties. This will reduce wastage, errors and confusion increasing productivity. Carrefour should also hire employees with a variety of skills to enable it compete well with other stores. According to Freeney and Fellenz (2013, p.142), skill variation will also enhance productivity of Carrefour. The research also recommends that Carrefour increase job significance though relating all the jobs to the success or failure of the company. The company can also enhance job feedback through extensive communication.
Torraco (2005, p.85) suggests that the management and employees of various stores should be in consistent communication. Carrefour Company should also enhance that job autonomy is guaranteed. In job design a job should be complete and its independence guaranteed. According to Erskine (2012, p.12), duplication of duties should be avoided through enhancing job autonomy. The supervisors, accountants, human resource officers and other employees of Carrefour should not be replicated.
Location planning and Analysis
There is a need for Carrefour to carryout location planning and analysis. Analysis of location and its planning should be emphasised especially before establishing new business. For example, Carrefour Company would have carried out location analysis before opening a business in Australia. Location planning and analysis should also have enable Carrefour to predict the incoming of many competitors in the market. According to Hale, Huq, and Hipkin (2012, p.4271), the site of business should enhance its accessibility and relevance. The business site should also be planned to ensure that there are no accidents and all the facilities are well positioned.
The most appropriate theory in planning and layout is the central place theory. The central place theory war put forward by Wlater Christaller in the year 1933. According to this theory the location and spacing of cities and supplying business is crucial to the dependant population. According to Raman, Nagalingam, and Gurd (2009, p. 5611), the central place theory pose it that retail trade centres should analyse locations to identify the ability of its population to support business.
The central theory also claims that retail trade companies should also analyse location in order to know the range of customers. Customer range is the maximum distance that customers can willingly cover to fetch goods and services. Carrefour should therefore analyse the location of its businesses in various countries for range and position. In the same way the retail traders should analyse the location and the planning of its business before venturing into a new market. In this theory the economic status of the consumers is important in determining the location of business. This theory also poses it that higher economic status consumers are likely to by-pass stores that offer only one or few products. It is therefore important that Carrefour Company consider the class of consumers in a certain location before putting up business.
Recommendations
This research recommends that Carrefour company carry out the analysis and planning of location of its business to enhance returns. Carrefour Company should locate its businesses in accessible areas. Raman, Nagalingam, and Gurd (2009, p. 5611) suggest that the position of the business should also be in areas with consumers that have high economic ability. It is also recommended that Carrefour Company stock its stores with a variety of products to enhance its business. Availability of variety of products also makes the consumers shop for many products at the same place. This will increase the profit margin of the stores.
Management of Quality
The quality of management is an important determinant of the success of a business. Chandler and McEvoy (2000, p.43) assert that the management of an organisation is charged with the responsibility of providing leadership through controlling, planning, commanding, counselling, and coordinating of events. The success or failure of an organisation is mainly attributed to poor or good leadership. Carrefour Company’s success in many countries like France and China can be attributed to its good leadership.
In the same way the failure of Carrefour in Australia where it closed shop and laid off more than a thousand employees is also attributed to poor leadership. Wright and Timothy (2005, p.409) observe that the quality of management will impact on its effectiveness and service delivery. Carrefour Company has embarked on quality improvement through adoption of information communication technology in its operations in most countries. The company has also improved on quality through product diversification and re-branding.
The most adaptable theory of quality management is the total quality management theory. This theory was put forward by Deming and Juran in 1930’s. The management theory was later enhanced in 1990’s. According to Chandler and McEvoy (2000, p.43) the total management theory poses it that improvement in quality leads to decline in product cost and hence productivity of an organisation goes up. This theory further emphasise that organisations management should device methods of improving the quality of their service or/and products. The Carrefour Company that aims at overtaking it major competitors in the retail market is also seeking methods of improving its management quality. Hansson and Klefsjo (2003, p.71) argue that with improved management quality, there is a decline in loss and employees of the organisation work as a team.
Recommendations
Carrefour companies should enhance management quality through implementation of the total quality management guidelines. Carrefour companies should emphasise quality improvement in order to reduce the cost of production of goods and services. The company should analyse on its methods of production and distribution of goods and service. These methods should enhance the quality of services that the retail stores offers. The management should coordinate the process of service delivery, control the level of delivery and plan for improvement of the mode of service delivery. For instance all the stores should adopt the use of information technology to reduce time wastage. It is also important to automate most of the services in order to reduce the cost of labour and errors.
Quality Control
Quality control is the dream of every business venture. When organisations meet the expectations of the customers and even exceed it, then the organisation has control of quality. Carrefour companies also focus on achieving quality in delivery of products and service to its customers. Quality goods and services have become an important determinant of the success of failure of the organisation. According to Freeney and Fellenz (2013, p.1427), the quality of goods and services can only be improved through continuous communication between the organisation and its customers. For Carrefour companies to achieve quality control in all its supermarkets there must be good coordination and team work between its front-line associates and the management.
Schreier, Fuchs, and Dahl (2012, p.18) affirm that coordination enables the company management and employees to know exactly what the customers want hence work to better it and even exceed the expectation of every customer. In quality control the focus of an organisation is on its customers. Schreier, Fuchs, and Dahl (2012, p.18) continue to affirm that customers will use various parameters to measure the quality of products and services. For example, quality will be manifested by the absence of defects, deformities and flaws, and lack of additional value.
The most applicable theory of quality control at Carrefour retail business is the 5P’s theory of strategic management that was put forward by Pryor, White and Toombs in 1998. According to Pryor et al. (2007, p.4), there are five elements that an organisation must ensure their functionality for it to have control of quality. Based on the 5P’s theory, the five elements of quality control are Principles, processes, People, and Performance. Pryor et al. (2007, p.4) argue that 5P’s theory indicates a close connection between the purpose of an organisation and the processes. Organisation processes that enhance quality control of an organisation include its internal and external structures. An organisation like Carrefour must purpose to develop quality products and to offer quality services.
The purpose must then be supported by the availability of internal and external structures. The other element of quality control is the people in an organisation. Hansson and Klefsjo (2003, p.71) assert that organisation behaviour and the level of motivation its employees will greatly affect quality control. Motivated employees will work to satisfy the customer and to meet their expectations. It is out of people, purpose and processes that performance is rated as quality or lacking in quality. The purpose of an organisation leads to the formulation of specific quality control strategies. The strategies of an organisation drive the behaviour of an organisation, and then behaviour results in performance.
Recommendations
Carrefour Company should ensure that quality control is prioritised in its supermarkets. According to the 5P’s quality control model, the organisation must have a purpose to achieve success in the provision of quality services and goods in al stores. Since the quality of Carrefour company products was compromised in France for example by offering sub-standard meat, quality must be prioritised. Carrefour must also ensure that its human resource is able to achieve quality control through close communication with customers and the management. It is worth noting that if there was a close association between the people in Carrefour- France, the problem of selling six month expired baby formula would not have occurred. The company should also put in place the right processes and technology to ensure success. With purpose, people, principles and processes, quality performance will be achieved.
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